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Wednesday, November 25th, 2020, 10 days after the fork
"This is not financial advice.”
"Do your own research.”
"Don't risk more than you're willing to lose."
That's what everyone tells you right before they say something that probably sounds an awful lot like financial advice, based off of another person’s research, tempting you to risk every cent you've got.
That's not what I want to do. I'm not here to tell you this coin is going to 1000x like someone else might. What I'm more interested in is educating people about what BCHA is all about.
In this article I'll try and give you an honest and informed perspective on what makes this project unique, as well as the investment thesis for investing in this project.
So what is BCHA?
BCHA is a fork of Bitcoin Cash (BCH) that was created on November 15th, 2020. Since BCH is itself a fork of Bitcoin (BTC), all three coins, BTC, BCH and BCHA, share the same genesis block, the same sha-256 hashing algorithm, and they're all limited by the same 21M capped supply.
Why was BCHA created?
Most people know that when BCH forked from BTC back in 2017, it was due to a difference of opinion on how to scale the network. Those who created BCH believed that on-chain scaling by raising the block size limit was the best path forward while BTC supporters preferred to keep the blocks small and rely on second layer solutions like lightning network instead.
Whereas everyone in the BCH community agreed on bigger blocks, over the past year there has been a growing schism between Bitcoin ABC’s supporters and the rest of the community regarding how to fund infrastructure development. This would be funding that would go towards protocol development as well as developer toolkits, libraries, wallets, and anything else that could benefit the entire ecosystem.
While those who stayed with BCH believe infrastructure can be built and maintained using a donation based funding model, a small but passionate group of BCHA supporters are trying a new approach with miners being required to pay 8% of their coinbase reward to insure adequate funding for development.
Those who opposed the idea of this new coinbase rule compare it to a tax, but those in favor see it as nothing more than charging miners for services rendered just like in any free market transaction. No one is forced to pay the 8% because no one is forced to mine the chain. The whole thing is voluntary.
This new rule finally aligns the incentives of both miners and developers and insures a mechanism to pay developers while also incentivizing them to make BCHA more valuable. The more valuable the coin, the more valuable their 8% becomes.
Who leads BCHA development?
The BCHA project is led by Bitcoin ABC. This is the team that initially forked the Bitcoin Core codebase and created Bitcoin Cash on August 1st, 2017. For over three years this small group of engineers served as the stewards of this project, maintaining the code, fixing any bugs, and acting as a strong lead implementation that miners and businesses could rely on.
Bitcoin ABC's lead developer is Amaury Sechet. Sechet is an experienced software engineer who worked at Facebook for four years working on, of all things, coming up with scaling solutions. He left Facebook at the end of 2016 to focus on Bitcoin full time, ultimately leading to the creation of Bitcoin Cash in the Summer of 2017.
Currently Bitcoin ABC employs 10 people, which is more than it's ever had since its inception. There are 8 full-time software engineers, a technical operations manager, and a content marketing manager. If you want to learn more, check out their latest transparency report here.
Where is BCHA heading next and how will they accomplish their goals?
BCHA aims to complete ABC’s roadmap and deliver a peer to peer electronic cash system that serves the entire world. The goal is to scale to terabyte blocks allowing for 50 txs/day for 10 billion people on the planet.
How they hope to accomplish that is by making intelligent design decisions and delivering quality code. The new coinbase rule will provide steady and predictable funding that will allow them to quickly grow their team.
This is a radical change for Bitcoin, and in many ways I think it's a kind of miracle we have it at all. The 8% equates to just over .5 BCHA in each block including 8% of the transaction fees. That works out to 26,280 BCHA a year. Here’s the address where the 8% gets diverted to. To me it's a beautiful thing:
Who do you think will be more motivated, a team getting over 26k coins a year, or a team that has to ask for handouts every so often while working for scraps?
I believe the new coinbase rule aligns the incentives of both miners and developers to grow this project together while also making the network more immune to capture by outside forces.
Last but not least, so what about the price?
Who knows. For the past week an unknown miner has been mining empty blocks on the BCHA chain and threatening to dump the price in the coinbase message of their blocks:
To their credit, there was a noticeable drop in BCHA prices starting at midnight UTC time, but it only appeared to affect Coinex and no other exchanges. The price dropped to as low as the $11 range but no lower and have since rebounded to about $15 a coin at the time of writing.
Whether that's the end of it or there's more dumping on the way, I can't say. But what I can tell you is that no one can sell forever.
Look, I have no idea what's going to happen to the price. I can’t reassure you and tell you everything’s going to be okay and we’re all going to be rich.
But here's what I've been thinking. At the moment most people have no idea BCHA even exists. It's only listed on a handful of exchanges and doesn't even have an official name or ticker yet. Add all that to the uncertainty surrounding this unknown miner and it's hard to imagine the BCHA sentiment getting much lower than this. Of course it's possible they're not finished dumping, but if they are...
Of all the legitimate Bitcoin forks, it's likely the BCHA branch has the fewest coins in circulation with so many coins likely to have been lost by being the minority fork of a minority fork. And with prices hovering around $15 a coin, I am seeing people buying them up in the thousands.
As far as fundamentals goes, I have nothing but the utmost confidence in the entire team at Bitcoin ABC. I've had the good fortune to be able to interact with many of them and ask them questions to gain many valuable insights. I can assure you this project is in good hands.
Amaury and his team are focused on the ultimate goal of delivering peer to peer digital cash for the world. With the new coinbase rule they’ve willed something into existence that many would have said was impossible. And the fact that we still have the rebrand to look forward to, as well as the Global Network Council, it's hard to not to think the future looks bright for BCHA.
With seats to the GNC going to the people who can prove they are one of the top 21 coin holders, there will also be an added incentive to accumulate BCHA. I think people are underestimating the effect this can have on the scarcity of the coin.
Like I said, I have no idea what the future holds, but I can't help but think this could be an opportunity that doesn't come too often, an opportunity for a second chance at being a part of something special from the genesis of the project.